Keith Hudson's Musings

No surge in Third World shale gas development

As a corollary to my penultimate post about the unique period of history that we call the Industrial Revolution (IR), the steam engine would not have been enough to get the IR going. It necessarily needed vast amounts of underground coal as well to feed the hundreds, then thousands, then tens of thousands of steam engines that were powering industry and transport during almost all the 19th century.

However, if the IR had depended on the steam engine and coal alone then it probably would have petered out by about 1880. What happened then was just as miraculous as the existence of coal. It was, of course, the existence of an even cheaper and less polluting source of energy — oil and gas — at about that period. Steam-engined motor cars, unlike railway locomotives, were snuffed out of existence before they could properly be developed.

And now, in the last few years, we have an even larger source of even cheaper, even less polluting energy — shale gas and oil from much deeper, originally oceanic, deposits. Surely, therefore, the case I was making in my penultimate post doesn’t stand up. We now have more than enough energy for the IR to continue for a long way into the future yet.

Not so. Most people in the First World countries are content with what they already have now by way of consumer goods. They only need new ones from tine time as replacements for existing ones. The Second World countries, such as India China and Brazil (perhaps !), are setting themselves up to make them also. Whether they’ll succeed in suppling all their populations remains a moot point.

The rest of the Third World countries, however, would also like modern consumer goods, of course, but they cannot afford either to make them or to buy them. They are all dependent on First World sources of loans — governmental and private. As the present world’s trading balance is hugely negative already they’ll never be able to get out of debt while the American dollar remains the world’s main trading currency. America can always inflate its dollar faster and more effectively than any other country.

And there are no signs that the First World countries are prepared to help the Second and Third World countries in the same way that America helped Europe get back on its feet with huge loans after the Second Wold War. There’ll be no surge in shale gas and oil production also except a gradual changeover to shsle gas in existing First World countries. Shale gas is pretty well available everywhere but it still takes lot of investment first to get the industry going.. First World countries are as little likely to develop shale gas production for the Third World any more than they are helping them with sufficient aid already

Meanwhile, the advanced countries, principally, America, Germany and this country — which continue to win almost all the Nobel prizes in science — because they have cornered pretty well all the existing sectors of scientific research — and any new ones that come along — are developing the next phase of economic development. These are sophisticated personal services in education and health care. These are, of course, extremely expensive because the involve years of high skill training.

China and India might possibly be able to muscle into advanced scientific research in the coming decades. But apart from brilliant outliers such as Israel, Singapore and Sweden –already First World countries on their own account — in terms of research, it is difficult to see how Third World countries can ever break into the trading network between First world countries within at least a century or more.